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LATIN AMERICA

QUARTER BY NUMBERS
Q2 2016

LATAM AT A GLANCE
Regional trends & consumer sentiment
Looking through Latin Americas FMCG lens

COUNTRY SNAPSHOT
A local perspective of Latin American markets

BRAZIL CHILE MEXICO COLOMBIA

PERU ARGENTINA COSTA RICA

IN THE INDUSTRY
Nielsen Thought Leadership

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Tradingeconomics.com

LATAM AT A GLANCE
The Latin American growth challenge continues, in 2015 our economy slowed down due to oil prices, the
reductions of exportations to China, high levels of corruption and devaluation rates in most countries,
reducing consumer confidence throughout the region.

ECONOMIC PULSE OF CONSUMERS AROUND LATAM


The Nielsen Consumer Confidence Index measures perceptions of local job prospects, personal finances and
immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate
degrees of optimism and pessimism, respectively.

CONSUMER
CONFIDENCE INDEX

Q2'16 vs. GDP Inflation


Q2'16 (annual %
Q1'16 Rate
growth)

BRAZIL 74 0 -3.3 7.1

MEXICO 83 -3 2.4 3.2

CHILE 78 -2 1.8 3.6

ARGENTINA 71 -4 -1 38.4

Inflation GDP Q2'16 vs.


(annual % Q2'16
Rate Q1'16
growth)

6 2.3 2 85 COLOMBIA

-0.88 3.9 1,4* 38,6* COSTA RICA

3.2 3.6 11 102 PERU

CONSUMER
CONFIDENCE INDEX
Peru and Colombia are the bright spots of consumer confidence fuelled
by strong GDP growth. Important to highlight that after 6 quarters of a decreasing,
Consumer Confidence Index in Brazil, this is now stable this quarter and despite
Mexican loss of confidence, GDP growth is still positive.
* Consumer Confidence Costa Rica, measured by Universidad de Costa Rica
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LATAM AT A GLANCE

CONSUMER SENTIMENTS IN LATAM

WHAT ARE THE TOP 3 CONCERNS IN THE NEXT SIX MONTHS?

TYPE OF CONCERN
70%
60%
50%
Crime 40%
The economy 30%
Job security 20%
10%
0%
LATAM BR MX AR CO CL PE

ACTIONS TO SAVE ON HOUSEHOLD EXPENSES

TOP 3 ACTIONS HAVE THEY TAKEN TO SAVE MONEY

70%

60%

50%

40%

30%
LATAM BR MX AR CO CL PE
Switch to cheaper grocery brands Spend less on new clothes Cut down on out-of-home entertainment

Latin Americans have registered the highest record of switching to cheaper


grocery brands since 2014, pushed by Argentina (68%) and Colombia (54%)
which presented the highest percentage in the last two years.

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Copyright 2016 The Nielsen Company
LATAM AT A GLANCE
LOOKING THROUGH LATIN AMERICAS FMCG LENS
FAST MOVING CONSUMER GOODS MARKET DYNAMICS
(Weighted Global Growth Reporter) Latin America

MAM'15 MJJ'15 JAS'15 SON'15 NDJ'16 JFM'16

7.0% 7.3%
6.6% 6.4% 6.7% 1.2%
1.1%
1.4% 5.8% 0.5% 1.8% 1.1%

5.4% 5.7% 6.1%


5.1% 5.2% 5.2%

Unit Value Change Volume Change Nominal Value Growth

WHERE ARE THE FMCG GROWTH OPPORTUNITIES?


MEXICO: +3.5%
HONDURAS: +4.2%
NICARAGUA: +6.5%
GUATEMALA: +4.5%
COSTA RICA: +2.0%
EL SALVADOR: -1.5%

PANAMA: +4.5%
COLOMBIA: +3.3%

BRAZIL: -3.4%
PERU: +6.3%

CHILE: +2.7%

% Volume Growth AMJ16 vs. AMJ15 ARGENTINA: -7.1%


Avg. volume growth below vs. last period
Avg. volume growth above vs. last period

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Copyright 2016 The Nielsen Company
BRAZIL SNAPSHOT
Brazil is facing one of the most severe recessions in its history; economic activity will
continue to weaken while the political environment remains turbulent. We expect
GDP to decrease around 3.0% in 2016 and then rebound 0.9% in 2017. Inflation
slowdown and current account improvement will bring some relief, while fiscal
concerns will continue.

Brazils unemployment rate rose in June to its highest in nearly five years, eroding
consumer confidence about job prospects over the next 12 months 81% considered
LUIS ARJONA that job prospects to be bleak .
CLUSTER LEADER
BRAZIL & CHILE In addition, core inflation rate increased 7.7% in June of 2016 over the same month in
the previous year according to Banco Central do Brazil and consumers took measures
to maintain their basic needs 63% of Brazilians saved on out of home entertainment
and 60% tried to save on gas and electricity .

Meanwhile, 47% are seeking ways to save money in their grocery shopping, thats why
manufacturers must re-think their price point strategy (considering low price points
value for money) and be thoughtful about channel changes (Brazilian consumers are
doing more of their grocery shopping in discount and Cash & Carry formats fast
growing channels), manufacturers must offer alternative packages, exclusive skus or
cheaper brands.

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16


88
Forecast 85
2012 2013 2014 2015 2016 83 83
81 81
79 79 79
10.7 76
7.1 74 74
5.8 5.9 6.4
1.9 3.0
0.1

LATAM Brazil
-3.8 -3.3
Inflation, consumer prices (annual %)
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING JUN16 VS. YEAR ENDING JUN15

RY AMJ'15 RY AMJ'16 AMJ'16

9.6%
8.7%
6.9%
7.5%
5.1% 4.9%

0.6% -3.2%
-3.4%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume sales have reduced its contraction rate in spite of price increases

TOTAL BRAZIL CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

TOTAL BRAZIL-2.3%
Volume

MODERN TRADE
33% -4.7%

5.9%
Value

67%
OTHER CHANNELS 3.1%

According to our last Global Survey Retail Growth Strategies, Brazilians usually like to shop, 75%
of them said that enjoy shopping for groceries (vs. 57% of LatAm). Freshness (68%) and lower
prices (64%) are the main reasons for them to shop at a particular retailer.

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TOTAL BRAZIL BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG -3.2% 4.9% 9.7%


PERISHABLES -2.3% 3.9% 6.3%
SWEET SNACKS -1.2% 6.8% 8.1%
SALTY SNACKS -1.2% 5.9% 7.2%
BEVERAGES -7.1% 1.5% 9.3%
ALCOHOLIC BEV. -4.7% 1.8% 6.8%
PERSONAL CARE -1.8% 8.3%
HOUSEHOLD CARE -3.0% 6.0% 9.4%

Facing the current economic situation, 29% of Brazilians saved money via cutting
down on or buy cheaper brands of alcohol

TOTAL BRAZIL PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

21% TOTAL FMCG 5.1%


32%
7.7%
Low Price

Medium Price 1.2%

47% Premium Price 7.6%

47% of Brazilians, are switching to cheaper grocery brands in order to save money, however
healthy segment (which is expensive) remains with superior growth (+8.2% in value sales)

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Copyright 2016 The Nielsen Company
CHILE SNAPSHOT
In contrast to the rest of Latin America, the Chilean economy has maintained a
sustained growth in the last few years, however; in 2015 Chile has faced an economic
deceleration because of the drop in copper prices.

In addition, multiple scandals of political corruption and a slight increase in the


unemployment rates (6.9% in June), generated a moderate GDP forecast for 2016
(1.6%), and recently economists have reduced the economic perspectives for 2017
2020 (Around 3.5%).
BRUCE MARTIN
MARKET Chileans are confident about future economy prospects for their country 74% think
LEADER that they are in an economic recession at this moment and 46% think that their
CHILE country will be out of the recession in the next 12 months .

However, consumers are worried about their personal finances 46% consider that
their personal finances will not be positive in the next 12 months, 70% declared that is
not a good moment to buy things that they want or need and 53% have decided to
switch to cheaper grocery brands .

In addition, consumer debt has increased by 5% last year 12% declared that debt is
their biggest worry, compared to 7% in Latin America and they are not confident
about their job prospects over the next 12 months 78% think that are bleak .

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16

Forecast 87
2012 2013 2014 2015 2016 85
5.5 83 84 83
5 4.6 4.4 81
3.6 80
3 79 79 79 79 78
1.9 2.1 1.8
1.5

LATAM Chile
Inflation, consumer prices (annual %)
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING JUN16 VS. YEAR ENDING JUN15

RY AMJ'15 RY AMJ'16 AMJ'15 JJA'15 ASO'15 OND'15 DEF'16 FMA'16 AMJ'16

9.4% 10.0
8.5%
8.0
7.2% 7.6% 5.3 7.4%
8.0% 7.0% 6.5%
5.9% 5.4%
5.1% 8.5%
8.6% 9.1%
8.4%

2.7% 1.9% 2.5% 2.8% 2.7% 2.7%


1.1% 1.1% 1.2%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL CHILE CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

1.5%
Volume

MODERN TRADE
5.5%
43%
57% 5.9%
Value

OTHER CHANNELS 11.4%

According to our last Global Survey, 35% (vs. 32% LatAm) of Chilean consider as a main reason
for the shopping trip the stock up on food or household essentials

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TOTAL CHILE BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG 2.7% 8.0% 5.4%


PERISHABLES 2.9% 5.9% 3.2%
DAIRY 0.4% 3.6% 3.2%
SNACKS & SWEETS 5.0% 12.1% 6.8%
BEVERAGES 2.2% 7.3% 5.7%
ALCOHOLIC BEV. 5.4% 11.8% 6.2%
PERSONAL CARE 1.5% 8.1% 6.7%
HOUSEHOLD CARE -2.9% 6.0% 9.4%

Food preparation categories and premium offerings in


home care have driven growth

TOTAL CHILE PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

18%
29% TOTAL FMCG 8.0%

Low Price 9.7%

Medium Price 5.5%

53% Premium Price 11.7%

According to our last Global Survey, 43% of Chilean are willing to pay a premium price, if the
product provides superior function or performance and 49% if contains organic or natural
ingredients

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MEXICO SNAPSHOT
Despite external factors such as oil price decrease, USD exchange rate increase and
internal political corruption scandals have influenced in the modest expansion of
Mexico's economy during the second quarter of 2016 (2.4%). Mexicans feel that their
country is in a recession (82%) and 55% declared that the country most likely wont be
out of the recession within the next 12 months.

Controlled levels of inflation rate (2.5% - July), employment generation and significant
rise of remittances (8.58% 1st. Quarter) influenced by exchange rate increase have
ARMANDO favored the internal consumption during the first semester, as a result and according
URIEGAS to the National Association of Supermarkets (ANTAD), retail sales grew 8.6% in June.
GENERAL
DIRECTOR However and according to Armando Uriegas Positive indicators start changing and we
MEXICO have recently begun to see some deceleration signals, particularly in household , beauty
and personal care products which are the first categories to be affected by an adverse
economic climate. Also increasing exchange rates have forced manufacturers to
increase their prices; this situation can lead to a consumption contraction.

Manufacturers must be strategic in their implementation of price points to help small


budgets and value for money proposals, for those who can pay more for bigger sizes
and be thoughtful about innovation. I think that this will be key for companies to make
smart decisions in order to close a successful 2016 and set the basis to guarantee their
success next year, it is likely the country will register further decrease in the economy of
2017, which undoubtedly will impact consumption Armando Uriegas.

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16


89
Forecast
85 86 86 86
2012 2013 2014 2015 2016 84
83 83 83
4 4 4.1 81
3.6
3.2 79 79
2.3 2.1 2.5 2.4
1.4

LATAM Mxico
Mexico
Inflation, consumer prices (annual %)
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING ON JUN16 VS. YEAR ENDING ON JUN15

RY AMJ'15 RY AMJ'16 AMJ'15 JJA'15 ASO'15 OND'15 DEF'16 FMA'16 AMJ'16

6.9% 6.6% 6.9%


6.1%
5.3% 5.5% 5.7%
5.4%
4.2%
3.6% 3.5% 3.2% 3.6%
5.3 2.6% 2.7% 2.9%
5.5%
1.5% 3.5% 1.9% 2.7% 3.0% 3.1% 3.4% 3.6% 3.5%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL MEXICO CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

2.9%
Volume

MODERN TRADE
4.0%
40%
60% 6.5%
Value

OTHER CHANNELS 7.1%

According to our last Global Survey, 35% (vs. 34% LatAm) of Mexican consider as a main reason
for the shopping trip to buy a few essential items

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TOTAL MEXICO BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG 3.5% 6.9% 3.6%


PERISHABLES 1.3% 4.6% 3.4%
BEVERAGES 6.0% 8.9% 3.4%
PHARMACIES 4.2% 6.7% 2.6%
SNACKS & SWEETS 4.3% 9.1% 4.0%
PERSONAL CARE 1.0% 4.6% 3.7%
DAIRY 4.4% 6.5% 2.0%
HOUSEHOLD CARE 2.2% 6.2% 4.0%

Food preparation categories and premium offerings in


home care have driven growth

TOTAL MEXICO PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

16%
24% TOTAL FMCG 6.9%

Low Price 5.2%

Medium Price 8.6%

60% Premium Price 3.9%

46% of Mexican, are switching to cheaper grocery brands in order to save money,
while generic brands are growing 10.4% because of diversify their product assortment

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COLOMBIA SNAPSHOT
Recent price increases, potential tax reforms and political themes such as the possible
peace agreement have provided Colombians with a perception of an internal crisis
79% think that their country in an economic recession at this moment and 55% think
that the crisis will not end within the next 12 months .

However, Colombians have shown better levels of consumer confidence than Latin
America as a whole and they are more positive about their finances 63% thinks that
their personal finances will be good or excellent in the next 12 months thats why we
JUAN FELIPE can observe positive results in FMCG measured by Nielsen .
SAAVEDRA
GENERAL According to Juan Felipe Saavedra Despite price increases, most categories were
DIRECTOR stable, driven by beverages which represent 60% of total growth in the last period; in
COLOMBIA part the El Nio phenomena and partly because they were less affected by inflation. In
the next quarter we expect a slowdown of beverage consumption due to the rainy
season and a discreet positive trend will continue in food, personal care and household
products. We anticipate that the final balance of 2016 is slightly higher than 2015.

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16


94 93 90 94
Forecast 85 83 81 83 83 85
79 79
2012 2013 2014 2015 2016
6.8
6
4.9 4.4
4 3.7
3.1
2.4 1.9 2.3

LATAM Colombia
Inflation, consumer prices (annual %)
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING ON JUN16 VS. YEAR ENDING ON JUN15

RY AMJ'16 JJA'15 ASO'15 OND'15 DEF'16 FMA'16 AMJ'16


TOTAL BASKET

8.2% 8.7%
5.9%
7.1%
8.7% 6.0% 5.9%
5.2% 5.3% 5.4%
4.7%
5.3
2.8% 3.3%

3.3% 2.7% 2.4% 2.5% 2.8% 3.3% 3.3%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price


Source: Nielsen Retail Index Value in Local Currency - Variation in volume pondered by value share 130 categories

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL COLOMBIA CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

1.3%
Volume

MODERN TRADE
25% 4.0%

8.3%
Value

75%
OTHER CHANNELS 8.8%

According to our last Global Survey, 36% (vs. 34% LatAm) of Colombian consider as a main
reason for the shopping trip to buy a few essential items

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TOTAL COLOMBIA BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG 3.3% 8.7% 5.9%


PERISHABLES -0.5% 8.6% 9.4%
BEVERAGES 6.8% 10.8% 4.5%
SALTY SNACKS 2.2% 8.8% 6.5%
PERSONAL CARE 1.2% 7.3% 6.2%
HOUSEHOLD CARE 0.6% 6.0% 5.7%
MISCELANEOUS 2.3% 6.0%

Food preparation categories and premium offerings in


home care have driven growth

TOTAL COLOMBIA PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

15%
26% TOTAL FMCG 8.7%

Low Price 10.9%

Medium Price 7.1%

59% Premium Price 11.3%

According to our last Global Survey, 56% of Colombian are willing to pay a premium price, if the
product provides superior function or performance and 53% if contains organic or natural
ingredients

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EMERGING MARKETS
Emerging Markets represent 23% of Latin American GDP growing at an average of
0.6% (1.5% w/o Venezuela). With more than 190 Million consumers, these countries
are a mixture of realities, challenges and opportunities.

Last year we observed wide contrasts between countries, while Venezuela and
Argentina are facing severe recessions with high inflation rates, volatile political and
economic situations, which where reflected in their FMCG evolution, countries such as
Peru have plenty of opportunities FMCG are growing 6.4% in volume sales vs. last
MARTHA rolling year .
GIRALDO
CLUSTER LEADER Central America and The Caribbean have shown higher than average volume rates
EMERGING compared to the rest of Latin America, because this area has been less affected by
MARKETS falling oil prices and other raw materials. This average is the result of various countries
with positive views, while we see some negative trends, in many cases related to the
socioeconomic context and issues of violence.

According to Alvaro Navarro, Market Leader of Central America and Caribbean, On


the positive side, we have found growing behaviors in Dominican Republic, Panama
and Nicaragua, in these countries there is macroeconomic growth and political
stability. In addition, these countries are the least affected by the phenomena of
violence which other Central American countries have faced. Costa Rica and Honduras
have shown a recovery in their basket after previous periods of decline.

On the negative spectrum we have two countries which are: El Salvador, where
consumers are worried mainly by issues of violence and extortion caused by gangs
(Maras) and also Puerto Rico, whose long economic crisis has been exacerbated by
issues of migration and default on its public debt .

Finally, Guatemala, which has also had issues of violence showed a growth in the
basket but this is now beginning to decelerate.

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PERU SNAPSHOT
Peru is a bright spot in the region, with more than 30 million people and one of the
highest forecasts of GDP Growth (3.6%). Peruvians are positive about their future
and are more optimistic than ever after the election period, the new government is
committed to generate new ways of long term economic growth, and therefore the
uncertainty has been reduced. In addition, inflation levels (0,14% the 2nd lowest
inflation rate in 2016) have reduced products price perception and favoring the
positive performance of FMCG sales Increasing 6.4% in volume sales in the last
rolling year .
ANDRFRENK
MARKET LEADER We are still positive about the growth expectations, lead by Traditional Trade sales
PERU increasing in more moderate rates. Andr Frenk (Market Leader of Peru and
Ecuador).

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16


Forecast 99 96 102
95 95 91
2012 2013 2014 2015 2016 85 83 83
81 79 79
6 5.9
4.4
2.9 3.2 3.3 3.2 3.6
2.7 2.4

Inflation, consumer prices (annual %) LATAM Per


Peru
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING ON JUN16 VS. YEAR ENDING ON JUN15

RY AMJ'15 RY AMJ'16 OND'15 DEF'16 FMA'16 AMJ'16

5.1% 5.3% 5.4%


5.1%
5.3% 4.9%

6.3% 2.3% 0.2% 2.4% 2.7%


1.6%

3.6% 3.9% 5.2%


-1.1% 5.6% 4.5%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL PERU CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

1.0%
Volume

MODERN TRADE
30% 6.4%

3.4%
Value

70%
OTHER CHANNELS 5.9%

According to our last Global Survey, 54% of Peruvian, are switching to cheaper grocery brands in
order to save money, while generic brands are growing 7.1%

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TOTAL PERU BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG 4.5% 5.1% 2.7%


PERISHABLES 2.7% 3.3% 0.8%
BEVERAGES 14.1% 11.6% 3.4%
SWEET SNACKS -3.7% 0.0% 3.9%
PERSONAL CARE 0.9% 2.7% 2.2%
HOUSEHOLD CARE 3.9% 10.2% 6.3%

Food preparation categories and premium offerings in


home care have driven growth

TOTAL PERU PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

17%
24% TOTAL FMCG 5.1%

8.3%
Low Price

Medium Price 0.8%

59% 15.1%
Premium Price

According to our last Global Survey, 43% of Peruvian are willing to pay a premium price if the
product provides superior function or performance and 49% if contains organic or natural
ingredients

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ARGENTINA SNAPSHOT
The current economic model continues to affect the decreasing purchasing power of
Argentineans, consumers are therefore trying to rebalance their budgets taking into
account high rate hikes in public services which have exceed 500%, increases in fuel
prices (over 30% in four months) and with other hikes such as prepayments, private
schools, building maintenance and other services. 17% of Argentinians stated that a
primary concern for the following 6 months was an increase in food prices and 13%
increasing utility prices Highest results in the region .

RAFAEL With Insufficient wages of workers, together with the expulsion of vast sectors of
GOUIRAN formal employment, the product of layoffs has led to a considerable reduction in
MARKET LEADER consumption of both durable goods and basic food products, which is why consumer
ARGENTINA confidence index reflects a decrease of 4 points vs. last quarter (71 points) which is
the lowest in the Region. Consumers are also holding off making purchases for the
moment 84% considers that this is not the right time to buy what they would like .

With all of this economic uncertainty consumers are making dramatic changes in order
to save money, these changes include: 68% have switched to cheaper brands, 59% try
to save on gas and electricity and 50% have cut down on out of home entertainment
and take away meals, according to Rafael Gouiran (Market Leader of South Emerging
Argentina, Uruguay, Bolivia y Paraguay) The second quarter has had the greatest
shrinkage in consumption. With a general feeling of anxiety regarding job permanence
and also timely in GBA, with an adjustment of utility tariff has caused consumers to
rethink their spending.

COUNTRY HIGHLIGHTS
ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX
Forecast Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
2012 2013 2014 2015 2016
85 88
38.4 83 81 81 83
38 75 78 79 75 79
71
26.6 26.9

10.8

2.3 2.4

-1.1 -2.6 -1
LATAM Argentina
Inflation, consumer prices (annual %)
GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR TO DATE ENDING ON JUN16 VS. YEAR TO DATE ENDING ON JUN15

YTD'16 ASO'15 OND'15 DEF'16 FMA'16 AMJ'16

34.0 34.7 35.0


5.3
29.7
26.0

31.8

3.0 2.4 2.0 1.3


-2.3 -2.5

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL ARGENTINA CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(YTD AS16 VS. YTD AS15)

-3.6
Volume

MODERN TRADE
35% -2.3

33.0
OTHER CHANNELS
Value

65%
34.0

According to our last Global Survey, 34% (vs. 32% LatAm) of Argentine consider as a main reason
for the shopping trip the stock up on food or household essentials

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TOTAL ARGENTINA BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (YTD16 VS YTD15)

VAR (%) IN WEIGHTED VAR (%) IN VAR (%) IN PRICE


VOLUME SALES VALUE SALES

TOTAL FMCG -2.3 30 34


PERISHABLES 0.1 29 29
BEVERAGES -3.5 29 34

PERSONAL CARE -5 31 38

HOUSEHOLD CARE -5.4 30 38

Food preparation categories and premium offerings in


home care have driven growth

TOTAL ARGENTINA PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

21% TOTAL FMCG 33.9%


32%
32.1%
Low Price

Medium Price 31.7%

47% 38.5%
Premium Price

If raw material costs rose substantially for a manufacturer of food or personal care products 23%
of Argentine prefer that manufacturers introduce new, smaller pack sizes at lower prices and
26% Offer larger economy sizes with lower price per usage/serving

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COSTA RICA SNAPSHOT
Although in the last six months the consumer confidence had been improving,
according to the latest survey by the Costa Rica University, which reported a slight
decrease to 38.6%, compared with the previous quarter it had reached 40%, these
results may have been influenced by recent labor figures, during the first quarter, the
unemployment rate stood at 9.5%, slightly lower than the 10.1% recorded for the
same period of 2015.

The landscape is encouraging due to an improving economy, with a growth of 4.4% of


ROBERTO GDP, 0.7 percentage points higher than a year ago; driven by internal consumption
DARSIE (4.7%), and the recovery of exports of goods and services (10.2%), also inflation rates
MARKET LEADER are controlled - in June 2016 reached 0.9%, and recorded 12 consecutive months of
COSTA RICA negative variation rates.

COUNTRY HIGHLIGHTS

ECONOMY WATCH NIELSEN CONSUMER CONFIDENCE INDEX

Feb'15 May'15 Aug'15 Nov'15 Feb'16 May'16


Forecast
2012 2013 2014 2015 2016 41 40 40 39
37
5.2 5.1 32
4.6
3.7 3.7 3.7
3
1.8 2

-0.8

Inflation, consumer prices (annual %) Costa Rica


GDP growth (annual %)

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FMCG MARKET DYNAMICS
VOLUME, VALUE AND PRICE EVOLUTION
YEAR ENDING ON JUN16 VS. YEAR ENDING ON JUN15

RY AMJ'15 RY AMJ'16 AMJ'15 JJA'15 ASO'15 OND'15 DEF'16 FMA'16 AMJ'16

0.5% 0.5%
1.3% 1.5% 0.7%
2.0% 2.0%
0.6% 0.5% 0.5%
-1.5% -1.7% 0.1 0.9%
-0.8% -0.5% -0.8%
-1.4% -2.2%
-1.5% -3.1%
-2.9%
-1.3%
-3.3% -3.5%
-3.2
-2.8%

% Variation in Volume Sales % Variation in Value Sales % Variation in Price

FMCG volume has improved with the favourable exchange rate stabilising prices

TOTAL COSTA RICA CHANNEL PERFORMANCE


VALUE SALES STRUCTURE AND VARIATION IN VOLUME AND VALUE SALES
(RY JUN16 VS. JUN15)

3.2%
Volume

MODERN TRADE
-2.3%
40%
60% 1.7%
Value

OTHER CHANNELS -4.2%

Small Formats in modern trade are gaining relevance in Costa Rica

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TOTAL COSTA RICA BASKETS PERFORMANCE
VARIATION IN VOLUME AND VALUE SALES (RY JUN16 VS. JUN15)

VAR (%) IN WEIGHTED VAR (%) IN


VOLUME SALES VALUE SALES VAR (%) IN PRICE

TOTAL FMCG 2.0% 0.5% -0.8%


PERISHABLES 3.1% -0.3% -2.4%
SNACKS & SWEETS -3.5% -0.5% 3.4%
BEVERAGES 5.8% 2.7% -2.2%
PERSONAL CARE 0.3% 0.8% 0.8%
HOUSEHOLD CARE 4.3% 1.6% -2.2%

Food preparation categories and premium offerings in


home care have driven growth

TOTAL COSTA RICA PRICE BY TIER VALUE GROWTH % ACROSS FMCG


VALUE VARIATION - LOCAL CURRENCY (RY JUN16 VS. JUN15)

20% TOTAL FMCG 0.5%


31%
4.9%
Low Price

Medium Price -6.4%

49% Premium Price 10.0%

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IN THE INDUSTRY
NIELSEN THOUGHT LEADERSHIP
Click on the images below for the latest industry insights from Nielsen.

JULY, 2016 AUGUST, 2016

HOW TO WIN IN
GLOBALLY SALES, 30%
COME FROM
TRADITIONAL
SMALL
STORES FORMATS?
7% 36%
Lead Growth
Markets Markets

40% 55% FOOD ON THE FRESH EXTENDED


Greater Emerging GO & RTE PRODUCTS SERVICES
China Growth & HOURS

TOP 250 RETAILERS TOTALED Convenience is not a store


AMOST US$ 4.5 TRILLION ~40% format its a consumer need

For more information, visit www.nielsen.com/latam

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Copyright 2016 The Nielsen Company


DEFINITIONS & SOURCES
Economy Watch
Economic Growth (GDP annual var. in %) and Inflation (CPI, annual var. in % EOP)
sourced from Latin Focus Economics July 2016. Data included in Snapshot by
country are the most recent available by local Banks.

Consumer Confidence Index


Nielsen global survey Q216 based on respondents with Internet access. Index
levels above and below 100 indicate degrees of optimism/pessimism. Costa Rica is
not included in Global Survey, for this report Consumer Confidence was sourced by
Universidad de Costa Rica for May 2016.

FMCG Market Dynamics


Compares overall market dynamics (value in local currency and unit growth versus
a year ago) in the Fast Moving Consumer Goods sector based on the sales tracking
Nielsen performs in the mentioned Latin American markets. The FMCG definition is
based on the widest possible basket of product categories that are continuously
tracked by Nielsen in each of these countries and channels.
Total Basket Latin America has been calculated in the Global Growth Reporter.

Super Category Performance


definition of Super Categories are based on local market definitions, Price tiers are
calculated in base of average category price (Low Price < - 20% vs. Category Price,
Medium Price between -19.9 %to 19.9%, Premium Price > 20%).

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